Questions and Answers
The General Debit column of the purchases journal is used to record purchases of all items on account other than merchandise on account.
True
The schedule of accounts payable lists only creditor accounts showing a balance.
False
Every transaction recorded in the cash payments journal results in a credit to cash.
True
Purchases of items for cash are recorded in the purchases journal.
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The purchases of merchandise on account are recorded in the Accounts Payable credit column and the Purchases debit column of the purchases journal.
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The __ is an all-purpose journal used for recording transactions that do not fit into a special journal.
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A special journal used for recording all cash paid out of the business is the __.
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The __ is the date by which the invoice must be paid if a discount is to be taken.
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A( n ) __ is an account in the general ledger that acts as a control on the accuracy of the accounts in the subsidiary ledger.
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__ is an account in the general ledger that controls the accounts receivable subsidiary ledger.
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The __ is a special journal used for recording all cash received by the business.
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A( n ) __ is a separate ledger that contains accounts for all creditors.
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The __ is a special journal used for recording all purchases of assets on account.
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The process of determining whether the amount of cash recorded in the accounting records of a business agrees with the amount recorded in its checkbook is called __.
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A( n ) __ is a special journal used for recording the sale of merchandise on account.
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The __ is a separate ledger that contains all charge customer accounts.
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The __ is a list of all creditors in the accounts payable subsidiary ledger, the balance of each account, and the total owed to all creditors.
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__ is an account in the general ledger that controls the accounts payable subsidiary ledger.
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Accounts in the accounts payable ledger have normal debit balances.
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An invoice dated June 17 with terms 2/10, n/30 must be paid by July 17 to take advantage of the cash discount.
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The Accounts Payable controlling account is found in the general ledger.
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Because a bank service charge is automatically deducted from the checking account of a business, it is not necessary to record an entry in the cash payments journal.
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Special journals should be footed before column totals are proved.
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The purchases journal is used only for recording the purchase of merchandise on account.
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Transactions recorded in either the purchases or cash payments journals which affect accounts payable subsidiary ledger accounts should be posted on a daily basis.
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Cash is usually proved at the end of the month.
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Check stubs and the bank statement are the only two source documents used for recording transactions in the cash payments journal.
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The special column totals of special journals are always posted at the end of the month.
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Study Notes
Special Journals Overview
- General Debit column in the purchases journal records non-merchandise purchases on account.
- Schedule of accounts payable lists only creditor accounts with outstanding balances.
Cash Payments Journal
- Every cash payments journal transaction results in a credit to cash.
- Cash payments journal is dedicated to recording all cash outflows of the business.
- Cash is typically verified at the end of the month, ensuring accurate financial records.
- Check stubs and bank statements serve as primary source documents for cash payments journal entries.
Purchases Journal
- The purchases journal captures all asset purchases made on credit.
- Merchandise purchases on account affect both the Accounts Payable credit column and Purchases debit column within the purchases journal.
- The journal is not solely for merchandise; it may include various asset purchases on account.
General Journal and Other Special Journals
- The general journal is an all-purpose journal for transactions not categorized in special journals.
- Cash receipts journal records every instance of cash received by the business.
- Sales journal focuses on the recording of merchandise sales on credit.
Ledgers and Controlling Accounts
- Accounts Receivable and Accounts Payable are controlling accounts in the general ledger overseeing their respective subsidiary ledgers.
- Accounts Payable subsidiary ledger maintains detailed records of creditor accounts.
- Accounts Receivable subsidiary ledger holds the information for charge customer accounts.
Documenting Transactions and Discounts
- Proper calculation of due dates is essential for invoice payments to ensure discounts are utilized effectively.
- It is necessary to note all financial activities, including those related to bank service charges, in appropriate journals.
Posting and Footing
- Transactions impacting accounts payable or purchases must be posted daily for accuracy and efficiency.
- Special journals should be tallied (footed) before checking column totals for verification.
General Ledger and Balances
- The Accounts Payable controlling account is tracked in the general ledger.
- Accounts in accounts payable maintain normal credit balances, counter to the assertion that they have debit balances.
Summary Statements
- The schedule of accounts payable comprises a full list of creditors, detailing balances and total liabilities.
- Special column totals across various journals are consolidated and posted monthly for review.
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Description
Test your knowledge on special journals in accounting with these flashcards. Focus on the purchases and cash payments processes as discussed in Chapter 17. Perfect for reinforcing key concepts and definitions related to business transactions.
